Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
Bitcoin price tumbled as concerns over a new US trade war sparked a sell-off across cryptocurrency and risk asset markets. The BTC/USD pair dropped to its lowest levels since January 13, nearing $90,000, as investors witnessed a significant liquidation event, with billions of dollars wiped off in a matter of hours.
As the crypto market entered February, traditionally a strong month for Bitcoin, the rapid downturn has shocked traders. Data from Cointelegraph Markets Pro and TradingView highlighted a loss of up to $6,000 since the previous week’s close. This sell-off led to what some analysts are calling "capitulation wicks" in altcoins, with many experiencing declines of 20% or more.
The US trade war, ignited by President Donald Trump’s decision to impose 25% tariffs on imports from Canada and Mexico, has created a ripple effect, unsettling the stock market futures and putting pressure on the Federal Reserve’s inflation plans. Trump acknowledged the potential for "little pain" in the short term but emphasized the long-term benefits of the trade measures.
The stock market futures plunged in response to the trade war news, with the S&P 500 losing $1 trillion in value shortly after the futures opened. This has also had a profound impact on the cryptocurrency market, which saw its combined market cap fall by as much as 21% over three days, totaling a reduction of $760 billion.
The US Dollar, conversely, has benefited from the turmoil, with the US Dollar Index (DXY) reaching its highest point since January 13. Analysts are now closely monitoring Fed officials’ upcoming speeches for hints on the future direction of interest rate policy, amidst a backdrop of significant earnings reports from 20% of S&P 500 companies.
In the crypto sphere, Bitcoin speculators are facing a critical test as the market searches for a potential bottom. The short-term holders’ cost basis, or the average price at which recent Bitcoin purchases were made, is being closely watched as a potential support level. This figure stood just below $92,000 as of February 2, according to data from Glassnode.
Market sentiment has taken a hit, with the Crypto Fear & Greed Index plummeting over 30 points in just three days, indicating a strong return of fear among investors. This sentiment is echoed in traditional markets, where the Fear & Greed Index also indicates a prevailing sense of fear.
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